Systemic injection of streptococcal cell walls (SCW) initiates acute and chronic inflammation in liver, spleen and peripheral joints of susceptible rats. Associated with the host response is a marked elevation in circulating leukocytes (WBC), within 3 to 5 days after SCW administration, > 3 fold above controls. The persistence of leukocytosis parallels development of chronic inflammation in target tissues. In studies to identify the cellular and molecular events leading to these chronic inflammatory lesions, we have utilized site specific agents in the evaluation of this pathophysiological process. A potent immunomodulatory cytokine, transforming growth factor-beta (TGFbeta), was identified in the inflamed synovium and granulomas of SCW-injected rats. Extracellular TGFbeta was found to be associated exclusively with microfibrils of elastin present in the extracellular matrix of the inflamed joint. In parallel, TGFbeta is expressed throughout granuloma development, and appears to mediate the recruitment and activation of monocytes and fibroblasts. Daily i.p. dosing of recombinant TGFbeta suppressed both the acute and chronic phases of the disease. Leukocytosis was reversed in the treated rats. Histological analysis of the joints revealed a marked reduction in inflammatory cell recruitment, less synovial hyperplasia and erosions than the SCW controls. The chronic phase was suppressed when TGFbeta was started between the phases. Cartilage and bone destruction could not be reversed when TGFbeta was given during chronic disease. In additional studies, daily oral dosing of the anti-inflammatory ethyl ester of mycophenolic acid (RS-61443) resulted in a dose-dependent suppression of the chronic arthritis with no differences in the acute phase. Histological evaluation demonstrated that RS-61443-treated animals had fewer inflammatory cells in the synovial tissue than the SCW controls. These studies reflect the contributions and regulation of cell-cell interactions in inflammatory lesions, and the potential for therapeutic intervention.